Hacker News Reader

Comment by iagooar | Hacker News Reader

It is great news for Berlin (and Brandenburg) as it will bring (big) money and attract talent. It might even attract people from Poland which is only an hour drive away and has a large pool of very talented and experienced engineers. So far besides maybe Siemens there wasn't too much industry here, which is more present in the south of the country.

Being outside of the city center it won't contribute too much to gentrification and probably it will help Brandenburg getting more people to live there, pay taxes, buy property, shop, etc.

So far reactions have been neutral to good, which by Berlin standards is an amazing result.

I kind of wonder if the decision of bringing the factory to Berlin wasn't based on the amount of software engineering talent that is available, more than the more traditional engineers.

In any case, I'm happy about Tesla coming to Germany, interesting times!

View on HN

I think it makes sense from that angle but also from the angle that Germany is rich grounds for poaching people that are currently working for one of the other big car manufacturers. E.g. VW just opened a huge plant for producing their EVs in Zwickau which would about 300km away.

Brandenburg as a state is an interesting. Crucially, it's not the state of Berlin (Berlin is s city state within the German federation). That means access to lots of grants/subsidies and also that they are somewhat shielded from the chaotic governance in Berlin.

> (Berlin is s city state within the German federation).

Is that a more literal translation of Bundesrepublik Deutschland?

In English, Germany is normally referred to as Federal Republic of Germany?

Yes, Germany is a federation of states. I think there are about 16 of them. They have their own governments, elections, etc. A few of those are city states (Berlin, Hamburg,...). Here's a list: https://en.wikipedia.org/wiki/States_of_Germany

The location Tesla picked is just outside of Berlin in the state of Brandenburg.

well it's a federation by name, unfortunatly most useful things aren't really as federalist as it should be.

that's why some things in germany are somewhat broken. some states want their autonomy, but this autonomy makes some things stupid, like our school politics (which are done by our states) and/or our public transport companies can be operated by states which sometimes just can't work (db is not)

germany actually has the same problem as the eu. states want to be as autonomous as possible, no matter the risks. and changes to this are seen as really bad, because people do not like "einheitsbrei".

No, Federal Republic is the correct term (and the literal translation of Bundesrepublik).

A federal republic is a form of federation, so calling Germany a federation of states is not wrong. Neither is calling it a federal republic more correct; just more specific.

The official name is Federal Republic. I have never seen anybody use the term "German Federation" and can't find many references on Google either.

They wrote it with small capital, which means it was used as a generic term which is completely fine.

OP was asking if "German federation" was "a more literal translation of Bundesrepublik Deutschland", which it definitely isn't.

Mercedes-Benz/Daimler also opened a software company in Berlin ~two years ago (MBition GmbH) that's in fast growth mode.

It’s interesting what kind of talent one needs for a factory. Engineers? I doubt... These will be simple workers, couple equipment operators with some education. All the blueprints are coming from Tesla’s HQ anyway, so not much engineering needed. There is also Tesla in Germany that does all the engineering: https://teslagrohmannautomation.de/de/

You are thinking of engineering the cars itself. However, in a factory like this, engineering is much more than that. Engineering, maintaining, and improving the factory won't be an exclusive gig from across the Atlantic (+ Great Plains + Rockys).

Aside from that, Brandenburg is rich grounds for the other staff a factory needs. You can combine cheaper EU-labor with mid-range jobs very well in Germany.

The only thing Tesla could face which it wont like are unions and workers rights because Germans sure won't put up with 100 hour work weeks or similar business practices.

Having real engineers with 6 years education on assembly lines is very important, and I'd say that's one of the reasons why China has so much success in manufacturing.

Without engineers among line workforce, there will be nobody to spot and correct tiny manufacturing defects and mistakes in the design that would otherwise be quietly "duct taped" and forgotten.

For my 10 years in OEM manufacturing, I haven't seen a single design that the factory people didn't send back to the client without a long "to fix" list. And those designs were coming from rather serious clients, with serious in house engineering.

Shows you how bad Brexit is for the UK that Tesla chose Germany over the UK.

Maybe like Italy we need reserved seats in the House of Lords for Engineering and STEM peers.

Do you have any proof that Tesla was going to build a plant in the UK before? Or are you overlooking how Germany has manufacturing and infrastructure more suited to building cars over all other EU members, including the UK!

Elon himself has cited Brexit uncertainty as a reason for choosing Germany over the UK.

Source: https://www.theguardian.com/technology/2019/nov/13/tesla-cit...

He also said “Some of the best cars in the world are made in Germany. Everyone knows that German engineering is outstanding, for sure, and that’s part of the reason why we are locating our gigafactory Europe in Germany. We are also going to create an engineering and design centre in Berlin.”

Thing is with Brexit, you have 50% wanting to leave, 50% wanting to stay and a proportional represented result being playout out by a first past the post system, yielding all sorts of chaotic stagnation. Which all gets blamed upon the initial proportional vote.

Hence if any business is asked about the UK, the whole uncertainty and chaos will come up in the subject. Just that people love to presume that was the single reason and without that things would be different. I don't see any reason or indication from Elon or Tesla to of picked the UK, even without the current climate of chaos and limbo finger pointing politics.

I think we would probably both agree that it wasn't the only factor, but it was a factor.

Plus, while congratulating the winners, it's more tactful to mention the reasons that made you decide in their favour rather than saying "we would have gone to the UK, if not for Brexit".

I don't know, without Brexit Tesla might have chosen Germany anyway.

There are many good reasons that have already been cited why Germany makes sense, additionally when you're building cars for a whole continent, for shipping reasons it makes sense to build a factory in the middle of it rather than an island on the side.

Britain has excellent sea connections, several existing large car manufacturers take advantage of that. (Germany does too, with river transport.) I doubt the land transport makes a significant difference either -- a good rail network extends across the whole EU, and there is car manufacturing in Spain, Romania etc.

I'm not going to pretend I'm in any way able to make a reasonable comparison, but companies like Ford and Nissan appear to have had no intention to move their UK manufacturing to Germany.

Tesla certainly considered it: https://www.theguardian.com/technology/2019/nov/13/tesla-cit...

I think we shouldn’t underestimate the amount of engineering knowledge needed on-site in a factory as big as this one.

You need lots of blue-collar-with-a-doctorate engineers. Batteries are closer to a chemical plant than car manufacturing.

A very important aspect you raise and another reason that falls into Germany's favour.

That is really interesting. What expertise are you speaking from?

I work in a factory and support factories in other countries. Headquarters have many engineers, satellite factories have only dozen. Mostly for maintenance and quality control. All the thinking and decision making happens in HQ.

Edit: typos

>It is great news for Berlin (and Brandenburg) as it will bring (big) money and attract talent.

Like the Gigafactory 2 in Buffalo did for New York state?:

But according to SolarCity’s financial statements, state officials “quietly issued a series of 10 amendments” to Tesla, allowing the high-tech jobs to become regular positions and requiring just 500 hires within two years -- down from 900. Tesla told Vanity Fair it was still responsible for creating 5,000 jobs, but the timing for the additional jobs has been extended to 10 years after the factory’s completion.

SolarCity was the center of the Buffalo Billion corruption probe by federal prosecutors, which last year led to high-profile bribery convictions of several people, including Louis Ciminelli, whose firm won the solar plant construction deal.

https://www.syracuse.com/state/2019/08/elon-musk-is-full-of-...

It's definitely positive, although I'm also slightly disappointed. I think the original plan was to build it near Dresden. That would have been quite a signal, but on the other hand it might be good for it to be successful to have it connected with the metropolitan region Berlin/Brandenburg.

One important difference between Brandenburg and Saxony that I'm guessing may have played a role: There is a component of the corporate tax called "Gewerbesteuer" which, in Brandenburg, is set at city-level and differs widely from city to city, whereas in Saxony it is high across the board. My guess would be that there must have been a mayor somewhere in Brandenburg that made them an offer that no mayor in Saxony could compete with.

It's set at a city/regional level in all of Germany, there are just very few areas that offer very low taxes. Those tend to be close to large cities to get companies to move headquarters out of the city. Hamburg and Frankfurt also have areas with one of the lowest tax rates just outside of city limits (not sure if Munich has one).

In the end, I'm not sure if it makes such a big difference, other incentives, land prices and availability of talent probably outweighs this.

...but in the countries of the former east there is barely any variation, whereas in Bavaria, Baden-Württemberg and Brandenburg there is massive variation. Also, you'd expect that in the countries of the former east, taxes would be lower to attract more business activity, but the opposite is the case, since those tend to have more left-leaning leadership.

> which by Berlin standards is an amazing result.

They only, and rightfully, get pissed when mega corps like google/amazon come in the city center, buy a 40 storey building and starts paying everyone 100% more than the average for the same position.

I don't see the problem there comrade :-)

From comments on here people have been saying the developers are seen as the poor cousins to traditional Engineers.

How is creating highly paid jobs in the city center bad?

Rent prices doubled since early 2010. Berlin is not mountain view, normal people actually live here and can't afford it anymore.

Rent prices didn't double because incomes doubled, otherwise people could still afford it. Rent increases because Berlin doesn't build enough affordable housing.

No, they are exactly right. Former migrant and working-class districts have been turned into habitats for the rich and the upper-middle class. Lower and middle income groups are driven out of the city. (Not completely. After all, we need them to take a two hour commute to wash the clothes of the rich and serve them coffee.)

Also because big corps pay insane amount of money and most companies can't follow, especially in berlin, which is neither a tech nor a financial hub.

There isn't a single cause to that but these companies are definitely part of it. If no one could rent these flats they wouldn't be that pricey... There is a lot of affordable housing too, I'm in the process of looking for a flat and a good 30% of them requires a Wohnberechtigungsschein

If a few thousand well paid people are enough to double the rents is a city of 3.6 million people, this is not the fault of the corporations "paying too much", it's the result of poor city planning.

It highly increases rents and thus destroys neighborhoods and communities

it's not only US megacorps, a lot of well funded tech companies pay salaries close to what Amazon or Google pay and they have to as that's what the market demands. As a software engineer in Berlin i can't really say i don't like that though. Berlin rents might have doubled since 2010, but they were also way below other german capitals due to Berlins history, so the rents coming to the same level as say Hamburg or Munich was just a matter of time anyway. In the end it creates value for the city, higher tax income, more spending. Yes, gentrification is a problem, but it's far less of a problem here then in other major capitals.

Could you name a few companies in Berlin that pay "close to faang" level in Berlin?

I don't know what Google pays for a Senior engineer, but from what I know about Amazon it's about 70-100k. Other companies that pay on this level:

- Zalando

- HERE Technologies

- N26

- Delivery Hero

- Soundcloud

- VW/Mercedes/Porsche backend startups (Proshare, Coup, Porsche Digital Lab)

And many smaller ones. From my circle, most Senior engineers earn in the 70-100k range total compensation. Since Berlin is still quite affordable, that allows a good standard of living.

I'm guessing you're being sarcastic?

I'm not, I don't want Berlin to become SF, rent prices are high enough. The fact that these companies do everything they can to not pay tax (aka give back to the local economy) is already enough for most people to tell them to fuck off.

> So far besides maybe Siemens there wasn't too much industry here, which is more present in the south of the country.

Siemens is big in Niedersachsen (e.g. Braunschweig) so it's more about East/West divide.

Some background for the non-German readers: Within Germany there's still a very noticeable divide between east and west, with average waegs, for example, being considerably higher in the west. This goes back to the different ways the two regions were managed after WWII.

So when a big (and presumably well-paying) company is going to create lots of jobs in the country, whether this is in an eastern or a western state is indeed a very important question.

EDIT: Please note though, that it's somewhat controversial how relevant the divide really is these days. Some will tell you it's 90% in peoples heads, others will tell you that there's still a long way to go before we can really call the german reunification complete.

In socioeconomic terms the north-south divide is much more pronounced than the east-west divide.

Politically, east-west is obviously dominant.

That's a bit skewed by the fact that most of Eastern Germany is also part of Northern Germany. I don't doubt that there is a north-south divide, but the industrial divide is still mostly West-East. In Eastern Germany, there was little manufacturing capacity at reunification which still shows effects today. Other parts of Northern Germany have been strongholds of car manufacturing for >50 years (most notably VW and Siemens).

Well, basically it is because the strong industrial base is in Baden-Württemberg and Bavaria.

I absolutely do not want more tech companies gentrifying Berlin and continuing the encroachment of foreign corporate Neubauten. The amount of berlin for the working class is shrinking by the day and the culture that draws people to this city is being scrubbed out as a result. When the protests inevitably happen, as they did for the Google campus before it, I’ll be standing on the picket line.

It's delusional to think Berlin will forever be the leftist dreamland that it has been for the last 30 years. This change is inevitable and in the end creates value for the city. The problems can be solved in different ways than fighting against tech companies that want to create well paying jobs and pay a lot of taxes. This actually draws a lot of diversity to Berlin, almost none of my friends and coworkers are germans, not even europeans and i love that.

Brandenburg is one of the poorest regions in Germany. Berlin as a city brings negative GDP to country.

I think they can just get it for (relatively) cheap there and that would be the main reason.

What you are trying to say is that the average GDP per capita of Berlin is lower than the average of Germany, thus having an overall negative effect on the per capita numbers for Germany. In this, Berlin stands alone among capitols. Usually, capitols are major "benefits" to their respective countries GDP per capita numbers.

But the statistic I assume you are referencing is a few years old, and Berlin has been the fastest growing state in Germany for quite a while now, a development that is still increasing. The numbers for 2019 aren't out yet, but I assume that at this point, Berlin is exactly average in per capita terms for Germany.

Why Berlin has been an outlier for capitols is quite obvious: It has only been Germanys capitol for a bit less than 30 years, and before that was divided.

Wages at the higher levels of education are not significantly lower in Berlin than anywhere else in Germany. Berlin (and Brandenburg) still has a somewhat higher levels of unemployment (at 7.x and 5.x%, respectively), but that doesn't really do much for such a project. Land is relatively cheap, but I doubt that makes much of a difference.

If I had to speculate, Tesla is concerned about finding people willing to relocate, and Berlin is a rather attractive destination even for people not speaking German.

That was my thought Berlin has the Cool Factor that other German Cities don't.

GDP is comparable to the concept of revenue for a company, which is not the same as profit/loss. Revenue cannot be negative unless the company is charging negative prices.

I think what you meant is that Berlin has a net inflow of tax money.

GDP measures value added (final output). If you want to measure total value of new goods and services you should look at Gross Output (GO). GO includes sales to other industries (intermediate inputs).

For example, US GDP is $21 trillion, US GO is $37 trillion.

This chart[0] clearly shows that Germany would have +0.2% GDP per capita without Berlin.

[0] https://qz.com/753244/berlin-is-the-only-capital-city-in-eur...

That means the GDP per capita is lower than the country average, not that the GDP contribution is negative and not that getting rid of Berlin would be good for the German economy.

Think of big cities like managers. They don't produce any products, so you might conclude that they're a waste of money.

Likewise, cities have their place in a countries economy, even if it's not to directly produce goods and driving up the GDP per capita.

In even simpler words: Remove Berlin from Germany and the GDP of the rest of the country would also go down.

Brandenburg and Berlin are fundamentally unrelated, they’re two completely distinct, and politically and (largely) economically independent regions. While Berlin is geographically within Brandenburg, they couldn’t be more different, and the geography is mostly of historical relevance when it comes to Berlin’s current economic position.

No, this is bad news; it's a smaller version of the economic bomb/distortion of creating a google campus somewhere. This will be bad for everything from housing up to the general health of startup culture in Berlin. Desperate move by the economically starved Brandenburg. (and of course they won't suffer the consequences)

The startup culture in Berlin is mediocre at best. I think bringing in proper high tech will be very valuable

What do you see it lacking? Berlin already has a lot. Just many of the "startup scene" aren't really aware of stuff like:

Mozilla and HPI (Oracle JVM research) doing cutting edge work.

Ableton and Native Instruments as world leaders in niche but influential software.

Car2Go and Coup with major financial backing from Mercedes and Bosch.

Tons of small seed-stage companies funded by the great smaller VCs here. ECB central bank policy pushes a lot of money into startup investment.

Well I am a part of the Berlin startup scene, so I have personal experience there, completing a fundraising attempt myself. I'm not saying there is no tech happening in Berlin, I just don't think that Car2Go and Coup are good examples of startups.

They are actually perfect example of the German mentality in investing in startups - fairly secure plays which they can understand.

As far as early stage investments companies go, it's not as nice as you make it sound. Have a look at any list of startups and apart from infarm (which is great and I've worked there) and maybe n26, most are ecommerce platform plays and some fintech (of which most are too late to the game). A lot of the people in my network wanting to do something different had to go elsewhere

Urbansportspass is a great example of a german startup: They have steady growth, good revenue flows, a great app and content customers.

I feel like in recent years the startup scene in Berlin has gone rather off rails, with obviously flawed projects getting funding. The truth of the startup scene is that >99% of projects are pretty bad, and never deserved to leave the brainstorming phase in the first place.

I also see a lot of hare-brained stuff in Berlin, fairly transparent money grabbing schemes with little hope to make a positive difference for anything and little innovation / originality.

Germany's most successful former startup is Zalando - they sell clothes online. Notably its success isn't selling the company to a stronger US rival who could have as well crushed it, but saved time and maybe money by buying instead.

Google is now hiring for engineering in Berlin adding to Amazon and Microsoft!

Worse than Amsterdam's?

So it would be better for Berlin if this factory was in another city? Taking that to its logical conclusion, it would be better for Germany to not have this factory in the country?

As long as we don't know at least the amount of subsidies paid by the state and the amount (and pay level) of employees who will work there, no factory at all could certainly be better, yes. The subsidies could be spent elsewhere, and the people could find work in facilities that won't exist because the new Gigafactory displaced competition. Without actual numbers this is all guesswork.

What consequences do you mean?

I could imagine that the factory staff would often live closer to the site, in Brandenburg, not in Berlin which has housing problems and is accumulating more of them through rent regulation.

you can still live in Berlin and be close to the site and in that area of Berlin is is also less housing problems, if any.

Yes of course - but surely isn't putting pressure on the hippiest areas of Berlin where some people riot to oppose gentrification.

Reply on news.ycombinator.com